Chinese smartphone maker Xiaomi took the wraps off its first electric vehicle on Thursday and promptly announced it was aiming to become one of world's top five automakers.

The sedan, dubbed the SU7, is a highly anticipated model that is expected to make the most of its shared operating system with the company's popular phones.

But the car is making its debut at a time when the world's largest auto market is wrestling with a capacity glut and slowing demand that have stoked a bruising price war.

That didn't stop Xiaomi Chief Executive Lei Jun outlining big ambitions that include building "a dream car comparable to Porsche and Tesla".

"By working hard over the next 15 to 20 years, we will become one of the world's top 5 automakers, striving to lift China's overall automobile industry," Lei said at the event.

Like several other tech firms, Xiaomi has been seeking to diversify beyond its core business to EVs - a plan it first flagged in 2021.

It has pledged to invest $10 billion in autos over a decade and is one of the few new players in China's EV market as authorities have been reluctant to add to the supply glut.

At the launch event in Beijing, Lei said the autonomous driving capabilities of Xiaomi cars would be at the forefront of the industry.

The Xiaomi-branded cars will be produced by a unit of state-owned automaker BAIC Group in a Beijing factory with an annual capacity of 200,000 vehicles.